A former executive of Abbott Laboratories (ABT) and Procter & Gamble (PG) will be the latest candidate to take a stab at fixing Avon Products’ (AVP) severely diminished North American business.
In December, Avon announced it would sell an 80.1% stake in its U.S. and Canadian division for $170 million to private equity firm Cerberus Capital Management, which is known for its turnaround expertise. That division, once Avon’s largest, has been named “New Avon” and will be led by Scott White starting next week, the unit said on Monday.
White most recently led Abbott’s $4 billion Nutrition International business at the end of a 10-year stint holding different positions at the health care company. Prior to Abbott, he worked at P&G for 15 years, managing a number of women’s and health and wellness brands.
White will have his work cut out for him—all the more so, given that he hasn’t worked for a direct-selling company. Avon’s North American sales fell by more than half, from an all-time high of $2.62 billion in 2007 to around $1 billion in 2015. The company has also been suffering from an exodus of its sales representatives. Where there were once 600,000 “Avon Ladies” in North America, there are now only 400,000, a devastating blow for a direct-selling company.
Avon CEO Sheri McCoy, a former Johnson & Johnson executive who also had no direct-selling experience before taking the reins, was unable to stop the sales decline when the North American unit was under her watch. The decline was caused in part by the company’s lateness to adapt to the digital age (in 2014, Avon updated its website for sellers for only the first time in a decade), as well as the emergence of cheap and trendy cosmetics stores like Sephora, and a bigger push into beauty at retailers from Kohl’s (KSS) to Target (TGT) to CVS (CVS). Avon was also hurt by a compensation model that was uncompetitive and by frequent changes in the kind of merchandise it was offering.
In 2012, McCoy replaced Andrea Jung, a chief executive who angered many of Avon’s sales reps, who saw her as being too busy being a star CEO to pay attention to their needs. McCoy remains CEO of the remainder of Avon.
Though many analysts have wondered whether New Avon should simply sell its cosmetics through a retailer or license the name to a major chain, the company has said it would focus on direct selling and improving its earnings potential. Indeed, White said he would go on a listening tour with Avon’s sales reps to learn how to fix the North American business.
“Over the next few months, I will be meeting with many of our Representatives, listening to them and learning what New Avon and I can do to support them, improve their earnings opportunity, and enhance their experience within our great Avon community,” he said.